Improved Europe TiO2 supply weakens Q3 sentiment after run of price hikes

Source: ICIS News

2018/07/04

LONDON (ICIS)--Improved availability in the European titanium dioxide (TiO2) market has weakened price sentiment for Q3 contracts, with rollovers and double-digit decreases indicated.

This is in stark contrast to the series of price hikes over the past two years, which were driven by tight supply.

Some price indications and settlement feedback this week have shown rollovers and decreases of €30-70/tonne from the paints, plastics and paper laminate sectors, according to buying and reselling sources.

However, price falls either side of this were also recently heard for Q3 business.

Buyers and resellers attribute the stable to softer price sentiment to a more relaxed supply situation in Europe, especially in light of increased imports from China over recent months.

Spot market sentiment is largely bearish for July amid ample supply and some suppliers being keen to shift volumes. Despite this, rollovers were also heard in certain cases.

Producers, however, have recently talked of residual market tightness, a positive demand outlook and raw material cost pressure, which they suggested is likely to lead to ongoing firm price sentiment this year.

Earlier this year, Chemours CEO Mark Vergnano said the company had agreed some longer-term sales contracts with its customers.

Availability is good, according to buying and reselling sources –with a few buyers saying that they have been approached to take more volume.

Supply of certain TiO2 specialty grades such as for printing inks or high quality plastics grade TiO2 remains somewhat restricted, while standard grades such as for paints are more readily available.

Production for certain standard grades at some sites in Europe may have been shifted in favour of higher-margin specialty printing ink grades, because of the ongoing reduced output at Venator's TiO2 Pori plant in Finland.

Demand is reasonable to muted, amid more cautious economic sentiment and plentiful stocks on the buy-side.

There is some expectation that activity is likely to slow during the third quarter amid the main summer holiday period in Europe.

There is also talk of a renewed drive among some downstream paints and paper laminates players to try to reduce their TiO2 consumption by using alternative materials, or by producing differing quality options which contain less TiO2 for cost saving reasons.

One buyer said that demand reduction is still a main consideration, noting that while prices are coming off they are still at a high level.

European TiO2 contract prices were assessed in the second quarter at €2.85-3.10/kilogram (KG), representing the highest price since the ICIS quarterly contract began in Q4 2013 and the eighth consecutive quarter of rises.

TiO2 is used as a white powder pigment in products such as paints, coatings, plastics, paper, inks, fibres, food and cosmetics.

Click here for the Europe TiO2 mid year outlook video.

Picture source: Stock Connection/REX/Shutterstock

Focus article by Heidi Finch